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Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: Direct materials $6
Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: Direct materials $6 Direct labour 10 Variable factory overhead 8 Fixed factory overhead 4 Total costs $28 The fixed factory overhead costs are unavoidable. Assume that Speck can buy 10,000 units of the part from another producer for $28 each. The current facilities could be used to make 10,000 units of a product that has a contribution margin of $10 per unit. No additional fixed costs would be incurred. Speck should C. O A. make the new product and buy the part to earn an extra $6 per unit contribution to profit. O B. continue to make the part to earn an extra $6 per unit contribution to profit. O C. continue to make the part to earn an extra $2 per unit contribution to profit. OD. make the new product and buy the part to earn an extra $2 per unit contribution to profit
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